At the beginning of March, the Government was promising a new dawn for housebuilding, with some ambitious plans:
- A million homes were targeted to be built within 5 years, with aspirations to increase that number to 300,000 per year.
- Budget and post-budget announcements heralded upwards extensions being included within Permitted Development Rights by the summer
- A consultation on the demolition of vacant commercial buildings to be replaced with residential units
- A sweeping review of Planning Permission was also promised
All of these plans seemed perfectly sensible, achievable, and were welcomed by the industry. How realistic are they, now that the Coronavirus crisis has hit us with a bang?
The Coronavirus Effect
“The UK’s construction industry was already facing a number of challenges, including potential labour and skills shortages caused by Brexit, but the Coronavirus crisis has brought new complications,” explains Richard Payne, from Oblix Capital.
“Even when the sites re-open, a sizeable proportion of site staff are likely to catch the virus themselves and remain off work, or they may still be subject to self-isolation.”
Richard Payne, Oblix Capital
“Other key resources such as surveyors and valuers may be in temporary short supply,” Richard continues.
“Supply chains will also take time to get back up to speed, particularly where supplies are brought in from abroad.”
Face the Future
During this pandemic:
- There is a realistic possibility that further lockdowns are required
- Consumer confidence, and their ability to purchase new houses will be impacted
- Savings may have been used up to pay essential bills, and debts may have accrued which will subsequently take priority for repayment
- Banks may be more selective when choosing who to lend to
- Reservations made ‘off-plan’ may be withdrawn
- A slowdown in demand may generate downward pressure on prices.
“These are uncharted times,” warns Richard. “One key difference from the financial crisis we experienced in 2008 is the strength of the banking industry at the time.”
In 2008 the banks and their lending practices were a cause of the problem. This time round, the banking industry is financially robust, and high street and specialist lenders alike will be part of the solution, not the problem.
“Once the dust has settled, the banking sector will play a key role in getting the industry back on track,” concludes Richard.
Property Aspects Magazine thanks Richard Payne for his contribution.